6 Habits of Successful Savers: Frugal Living for the 21st Century

6 Habits of Successful Savers: Frugal Living for the 21st Century featured image

Before the introduction of credit cards in the mid-20th century, saving wasn’t just a good habit; it was a necessity. If you didn’t save for a rainy day, you would have nothing to fall back on when hard times hit. Today, credit can be a double-edged sword. It grows our economy and improves standards of living. However, in the wake of the Great Recession, many Americans suffered the consequences of an overreliance on credit.

Only 35% of U.S. adults have over $1,000 in savings.

As Bucks County’s oldest community bank, The First has helped generations of local Bucks families and individuals navigate a changing economy. In financial boom times as well as downturns, our mission has always been to help our customers find the best products and services to meet their financial goals. Today, as more people are embracing a frugal lifestyle and discovering the benefits of saving, The First is pleased to offer this article on the 6 classic habits of successful savers. By distilling the saving habit into its core actions, anyone can adopt these changes, one by one, until they add up to big advances in your financial health. If you have questions, our friendly associates are always happy to talk to you over the phone or at your nearest branch.


1. Identify your reasons for saving

Everyone knows it’s smart to put money aside for a rainy day. Saving is a good habit, up there with flossing your teeth and getting a half hour of exercise every day. But just because you can quote Benjamin Franklin – “A penny saved is a penny earned” – doesn’t mean you actually have a lot of pennies in your savings account. For many people, knowing we should do something isn’t motivation enough. To jumpstart a savings habit, and stick with it through more than one temptation, you need to identify your ‘why.’

You’ll probably end up with more than one ‘why,’ and that’s a good thing. The more reasons you have for saving, the stronger your motivation will be to continue putting money away in spite of the fact that there are so many other things you could do that with that money right now. To identify your reasons for saving, try making a mind map. This method of brainstorming, likely a familiar habit from your high school English class, consists of brainstorming subtopics for a main idea. Begin by writing some variation of “Why Save?” in the center of your paper. Draw a circle around it. Then fill the rest of the paper with every answer you can think of. For example:

Why Save?

  • Retirement
  • Emergencies
  • Vacation
  • Kids’ college education
  • New car
  • Down payment on a house
  • Wedding
  • Holiday spending

These are some of the most common savings goals. Note that some of them are ongoing (if you want to take a vacation every year, you’ll have to start saving for the next one as soon as the current one is over), whereas others come with short-term deadlines (most weddings are planned within one-three years of the engagement). Finally, some longer-term goals, such as saving for retirement, have unknown deadlines. You may plan to work until age 65, but what if extenuating circumstances (job loss, health problems, caretaking duties) force you out of the workforce at 60, or 55? We can actually expect the unexpected to happen; we just don’t know what or when. Regular savers are prepared for everything life brings, good and bad.

Creating savings goals can help you stick with your good habits.


2. Find the right savings account

Now you’re ready to match your savings goals with the right account. There’s no one-size-fits all account for saving. For example, if you put everything into a regular savings account, you’ll retain accessibility to your money (in the case of emergency) but it won’t grow as quickly as in an investment account (which is why these are popular for long-term goals like retirement). Here are our suggestions for the savings goals listed above.

Continuous and Short-Term Savings Goals

For annual and other short-term, recurring savings needs, we recommend an account that gives you some access to your funds.

  • Statement Savings: This is a great place to start your emergency fund. You only need $100 to open the account and earn interest. And with free online banking, you can transfer money into your checking account when you need to cover a car repair or other emergency.
  • Holiday Club: With as little as $5, you can open this popular savings account to prepare for seasonal expenses. Earn interest on your deposits and receive a check in September to spend on winter festivities.
  • Certificates of Deposit: These accounts can help you save for a vacation, wedding, down payment, or other short-term goal. In exchange for not withdrawing money during the CD term (choose between our shortest or longer terms), you’ll earn a higher interest rate on your deposit. Let’s face it—sometimes you need to have your money out of reach in order to preserve its original purpose.

A Child’s Education

As college tuition continues to rise, it’s never too early to start saving to help the children in your life pursue higher education. Whether you are a parent, a relative or family friend, or even a child saving for his or her own college expenses, The First offers a fee-free Education Savings Account (ESA). ESAs can also be used for qualifying education expenses related to K-12 public, private, and religious schools.


Last but certainly not least, saving for retirement is perhaps your biggest and most important savings goal. Outside of public-sector workers, most people no longer receive defined-benefit pensions from an employer. Social Security usually isn’t enough to live on without additional sources of income. Thus, the burden is on individuals to plan and save for their own retirement. Luckily, the earlier you start, the more you’ll end up with as you approach middle age and the so-called golden years. Even if you get a late start, there are ways to make up for it and meet your retirement savings goals. At The First, our friendly and knowledgeable associates can help you choose the best retirement accounts to suit your needs, from IRAs to investment products.


3. Budget for saving

Do you have a budget? Successful savers know where their money is going, and they account for savings. Budgeting is an ongoing process, another important financial “muscle” to develop. Here are the three key tips for effective budgeting:

Be realistic

A budget with no margin for discretionary or unplanned spending is a recipe for failure. Try to leave yourself some “fun money,” either by reducing fixed expenses (rent, utilities, etc.) where possible, or looking for a side gig to help you pay down debt, save, and make a budget you can live with.

Stick to your budget

If your budget is realistic, you don’t have any excuse for breaking it. Be faithful to your original spending intentions, delaying the gratification of an impulse purchase, or suggesting a less expensive restaurant when friends want to go out to eat.

Budgeting is an essential part of being a good saver.

Track and review

Track your checking account transactions to make sure your money is going where it’s supposed to. With online and mobile banking, this is something you can do every day or once a week. There are also online budgeting programs, like Mint and YNAB, that help you set and track your budget. At the end of each month, review your budgeting successes and failures. Reflect on the habits, feelings, and circumstances that helped or hindered your budget. Then, revise accordingly for the next month. For example, if you spent more on food than you planned, you could adjust other categories to support the higher spending or re-think your grocery shopping and eating out habits.


4. Pay yourself first

This advice may be as old as Benjamin Franklin, but it gets passed on because it’s simple and true. However much you’ve budgeted for saving, set up auto transfers from your checking to savings accounts. It’s easiest to schedule these transfers on payday, so the money will disappear into savings before you can accidentally spend it on something else.


5. Eliminate debt

Debt in general, and high interest debt in particular, is your biggest obstacle to saving. Just as the interest you earn on savings and investments will compound, the same principle applies, unfortunately, to debt. Every penny you incur in interest charges on a credit card, for example, is a lost opportunity to save that same amount and watch it grow. At The First, we understand the challenge of getting out of debt. If high-interest credit cards have you feeling stuck, consider a debt consolidation loan.


6. Live a frugal, healthy life

As you can see, saving is a mindset, a lifestyle. While ‘frugality’ can have negative connotations in modern society, being frugal doesn’t make you the second coming of Ebenezer Scrooge. In fact, living below your means may be poised for a comeback. It’s a lifestyle choice that aligns with our concerns about the environment and our desire to keep a tidy home.

Living frugally helps you spend less while saving more.

When you spend less than you earn, you are telling yourself (and the world) that you have enough. Instead of constantly seeking a bigger house, better car, more luxurious vacations, etc., you have figured out how to want what you already have. Therefore, any raises you get, or extra money you earn, can go into your savings instead of funding a higher standard-of-living.

Of course, we are also living in the age of social media and HGTV, which can make it seem like everyone is happier, healthier, and wealthier than you are. Recognize the effect of scrolling through Instagram or Facebook, or watching the latest episode of “Love It or List It”—do you feel worse about yourself, feel like you need to buy something to solve a problem? Instead of going online or binge-watching home improvement shows, make plans with friends and family. If they want to meet at a restaurant, offer to cook a nice meal at home. Or suggest a nature walk – Bucks County is full of beautiful outdoor spaces that are free to enjoy. Don’t be surprised if your friends are glad you suggested a less expensive meetup. Once you break the cycle of “Keeping Up with the Joneses,” everyone can breathe a sigh of relief.


Save Local with The First!

Ready to go all in on saving? The First offers a full menu of savings accounts for every life goal. From our customer favorite, the Holiday Club, to trust and wealth management, we have everything you need to build your savings, right here in Bucks County. To open a new savings account, contact us today or visit your nearest branch in Newtown, Langhorne, Richboro, Levittown, Wrightstown, Washington Crossing, Fairless Hills, Jamison, Warminster, New Hope, and Doylestown.

Start saving with The First!